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Incoming travelers to be charged travel tax

20 December 2017

The Tourism Infrastructure and Enterprises Zone Authority (Tieza) is proposing the government’s scrapping of travel tax imposed on outbound travelers on international flights.

Pocholo Paragas, general manager and chief operating officer of Tieza, said the proposal had been forwarded to Malacanang and that President Rodrigo Duterte is reviewing it.

“We presented it to the President… I think it is about time to do something about it,” Paragas said.

International travelers are charged P1, 620.00 in travel tax upon checking in at the airport. Some airlines already include travel tax in the tickets for the convenience of travelers who would no longer line up at the airport to pay it.

However, travel tax would not be completely scrapped because it would be charged instead to incoming travelers, and would be included in the ticket price.

It would be called tourism development fund instead of travel tax, Paragas said.

“Put it inside the ticket so that people coming in will not feel it. It will be the same fund that will be used to make their next trip better,” he explained.

“We will adjust it based on requirements of the country. If there is none, zero. If we can get other investments coming in from other countries, coming from the banking industry, then we can lower it immediately. Every two years, we do review,” he added.

Paragas said the Tieza is targeting to collect P5 billion from tourists this year. The Department of Tourism had announced that it is expecting 12 million in tourists arrivals by the end of 2020.

State-run think tank National Tax Research Center (NTRC) earlier said the imposition of the foreign tourist tax will only make the Philippines uncompetitive and may lessen tourism activities in the future.

“The potential of the proposed foreign tourist tax to raise much needed revenue for the government to be used for tourism-related projects and programs, its imposition, as of the moment, may need further study given the negative effect it may pose to the tourism industry and the administrative difficulty in identifying those who travel purely for leisure and/or vacation purposes who are the real target of the proposed tax and those who visit the country for medical treatment, official trip/mission or potential business venture,” the NTRC study said.

“A foreign tourist tax of P1,620 may be charged to airline tickets, which is equivalent to the travel tax paid by Filipinos when traveling abroad. For the succeeding five years, around P15.3 billion annually is expected to be raised by the government from this source,” it added.

The International Air Transport Association also earlier urged the government to not overcharge the aviation sector through the tourism tax.

“The more tax you put on the passenger, the less prosperity you will bring into the country,” said Alexandre de Juniac, IATA director general and chief executive officer.

De Juniac said short-term budget gains quickly disappear when tourist arrivals drop, and the Philippine government must instead focus on making wise investments in the tourism infrastructure that will encourage people to visit.

“The extra tourist dollars you attract will pay the investments and make a greater economic contribution,” de Juniac said.